TODAY’S STUDY: Utilities Are Putting Big Money Into Distributed Energy
Utility Investments in Distributed Energy; Trends Among North American and European Utilities
Shayle Kann, Head of GTM Research/Andrew Mulherkar, Senior Analyst, GTM Research/March 2017
The emergence of distributed energy resources (DERs) is often characterized as occurring despite, or even in opposition to, traditional utility companies. While this may have been true in the early days of the DER market, times have changed. Many utilities are putting time, energy and capital behind companies and technologies that directly or indirectly enable customers to save, modify, generate and store their own electricity in new ways.
In order to analyze this trend, GTM Research constructed a database of all utility equity investments in distributed energy companies since 2010. The overarching conclusion is clear: Utilities are increasingly investing in a distributed energy future. However, the level of commitment and strategy varies widely across utilities and regions
Market Segments Covered/Market Segment Definitions
Direct Customer Energy Management – Technologies and services sold directly to customers in order to modify load, save energy and/or participate in demand response Utility Customer Energy Management – Technologies and services sold to utilities to help them with customer energy management programs, load modification and customer engagement
Distributed Solar – Rooftop and behind-the-meter solar technologies, installers and service providers
Distributed Energy Storage – Distributed energy storage technologies, installers and service providers
Utility DER Integration – Grid hardware, software and services that provide visibility into and/or management of distributed energy resources
Combined Heat and Power – Technologies and services related to the production of useful heat in conjunction with electric power, including waste heat recovery and conversion to electricity
Other – Electric vehicle infrastructure, fuel cells, etc
• Utility companies in North America and Europe have invested over $2.9 billion in 130 individual distributed energy companies since 2010
• Investment volumes have increased substantially over the past two years, and over $1 billion of the total came in 2016 alone
• 42 utilities have made investments or acquisitions in this market, and 10 of these companies have made at least five investments
• Five of the seven most active utility investors are headquartered in Europe, but a larger number of North American utilities have made at least one investment
• North American utilities have focused more on distributed solar, while European utilities have invested more in combined heat and power
• Most investments have resulted in minority equity stakes, but 37 distributed energy companies have been acquired by utility companies
Top Utility Investors: North America/Top Utility Investors: Europe
• Annual Investments Have Nearly Tripled in Number and Value Since 2010
• Utilities have invested over $2.9 billion in distributed energy companies since 2010. The actual number is undoubtedly significantly higher because investment amounts and acquisition prices are sometimes kept private. Over $1 billion of this total was invested in 2016 alone.
• Investment volumes increased substantially in 2015 and 2016, reflecting growing interest from utilities and their affiliates in distributed energy European Utilities Have Been More Active Than Their North American Counterparts
• European utilities have invested at least $1.78 billion in distributed energy companies as compared to $1.1 billion from their North American counterparts.
• European utility investments have been particularly aggressive over the past two years, as the traditional utility business model has been under threat throughout the region.
• Direct Customer Energy Management, Solar and DER Integration Receive Most Investments
• In both number of investments and dollar terms, direct customer energy management companies have received the most investment from utilities seeking to offer new solutions to their customers.
• Solar investment has picked up since 2013, while utility DER integration became a major focus in 2016.
• European Utilities Have Been More Active Overall, But U.S. Utilities Are More Invested in Solar
• North American utilities have focused on direct customer energy management solutions, while European utilities have invested more in utility customer energy management.
• Solar has been a greater focus of investment in North America, whereas combined heat and power has taken a larger share in Europe.